Should You Sell Your Current Home First or Buy First?

Buying or selling a home can be stressful but doing both at the same time can seem impossible.

If you have a clear idea of the process and a sound game plan, you can set yourself up for success if you if ask yourself the following questions:

Why?  What are the reasons for you wanting to move?  Really think about your desire to sell your current home and move to a new home.  There are many reasons why your current home may no longer fit your current lifestyle.  Your home is no longer big enough for your growing family, relocating for a job transfer or the home is just too big, and you need to downsize.  Take the time to think about your “why” to ensure making a move is the right decision. 

Can I Afford Two Mortgages?  First, you must assess your current financial situation and determine IF you must sell your home first to buy your next home.  One of the most common responses I get when I ask a client if they’ve talked to a lender to determine if they can obtain a second mortgage is, “Oh, I have great credit, I won’t have a problem getting approved.”  This is the biggest misconception when it comes to the financial aspect of this process.  A lender will look at several factors to determine whether you must sell first including your credit score, income, and overall debt.  Meaning, can you financially afford two mortgages considering your current monthly income and expenses?  This is referred to as your debt-to-income ratio (DTI) which is the maximum monthly debt obligation divided by your total monthly income.  If this DTI ratio is within the lending guidelines, then you have a greater chance of being approved for a second mortgage.  In most situations, people are in a situation where they need to sell before buying their next home.

Am I Ready?  Are you looking to move in six months, a year or as soon as possible?  You need to give yourself some time to prep your home, actively list your home, shop for a new home, and go through the “under contract” phase for your current and new home.  The average time it takes to close on a property once under contract (whether you’re buying or selling), is between 30-45 days.  Considering the timing of the buying and selling process will help you determine WHEN the timing is right. 

Do I Know Where I Want to Move and What I Want?  Just as when you purchased your first home, you will need to consider the areas you are interested in moving and the type of home you want.  Think about what is important to you in terms of the location, style, size, and other aspects of the home that you would like to buy.

Can I Afford to Move?  Find out what your current home is worth in today’s market, how much equity you have and the average sales price of your ideal home you want to buy.  These factors combined with the lender’s pre-approval purchase price will help determine if you will be financially able to make a move. 

Do You Have a Contingency Plan?  There are many moving parts when buying and selling a home at the same time.  Sometimes no matter how much we plan, “hiccups” can happen along the way.  You may want to think about alternative living situations in the event any delays arise.  *Although, I can tell you, most of the time this is not the case. 

There’s always some level of uncertainty and worry if everything is going to work out as planned.  Having a strategic plan, with a top real estate professional who knows and understands all your options can help achieve your goals.  I love helping those who are buying and selling! 

Email me at Jill@JillWatsonHomes.com if you are thinking of selling your current home and buying, but not sure where to start and we can discuss all of your options so you can make the right decision for you!